The foreign trade situation in August 2023 showed signs of recovery, but exports still faced many challenges, and whether policies to stabilize foreign trade would be further strengthened was a major concern. Meanwhile, the stabilization of the real estate market is expected to drive a rebound in imports.
On September 7, data released by the General Administration of Customs showed that in the first eight months of this year, my country’s total import and export value was 27.08 trillion yuan, a slight decrease of 0.1% year-on-year. Exports totaled 15.47 trillion yuan, an increase of 0.8%, while imports totaled 11.61 trillion yuan, a decrease of 1.3%. Specifically, in August, my country’s foreign trade import and export reached 3.59 trillion yuan, a decrease of 2.5% year-on-year and an increase of 3.9% month-on-month. Exports totaled 2.04 trillion yuan, a decrease of 3.2% year-on-year and an increase of 1.2% month-on-month; imports totaled 1.55 trillion yuan, a decrease of 1.6% year-on-year and an increase of 7.6% month-on-month.
Compared to the 8.3% year-on-year decline in my country’s foreign trade imports and exports in July, the rate of decline narrowed in August, particularly in exports, which fell by 3.2% from a 9.2% drop in July.
Zhou Mao, a macro researcher at the Financial Markets Department of China Everbright Bank, stated that the narrowing year-on-year decline in both exports and imports in August was better than market expectations, indicating an overall improvement in domestic and foreign trade. The narrowing decline in export value was mainly due to the strong resilience of my country’s exports, a narrowing of the overall decline in export commodity prices, and a lower base effect from last year.
In the first eight months of this year, my country’s total import and export value decreased slightly by 0.1% year-on-year, a 0.5 percentage point decrease compared to the data for the first seven months of this year. However, looking at August alone, my country’s foreign trade market clearly rebounded. In August, my country’s total import and export volume decreased by 2.5% year-on-year, with exports decreasing by 3.2% and imports decreasing by 1.6%. The decline rates for total volume, imports, and exports decreased by 5.8, 6, and 5.3 percentage points respectively compared to July.
Looking at a longer timeframe, in the first two months of this year, my country’s total import and export value decreased slightly by 0.8%. In March, it increased by 15.5% year-on-year; in April, it increased by 8.9% year-on-year; in May, it increased by 0.5%; in June, it decreased by 6% year-on-year; and in July, it further decreased to 8.3%. What caused the turning point in foreign trade, especially exports, in August? A research report from Orient Gold City International Credit Rating Co., Ltd. stated that the narrowing of the export decline in August was mainly due to two reasons: first, after the peak of exports last year, the base for export growth was significantly lower, which boosted the year-on-year export data for August this year; second, the downward trend in new export momentum has eased somewhat. “However, August’s export value still saw negative year-on-year growth for the fourth consecutive month, mainly due to weak overseas demand, with exporters generally reporting insufficient orders. We predict that with the global semiconductor and consumer electronics industries bottoming out and recovering, and the overseas economic downturn easing, coupled with the continued low base of export growth in the same period last year, the year-on-year decline in my country’s export value is expected to continue to narrow.” Zhou Maohua believes that although the export growth rate was still declining in August, exports were actually not weak and showed considerable resilience. On the one hand, the export value in August was far higher than the average for the same period in the past five years; on the other hand, the significant year-on-year decline in the average price of foreign trade exports dragged down the export value, while the average price of foreign trade exports maintained growth last year.
From the perspective of foreign trade structure, the growth rate of new drivers is impressive. In the first eight months, my country’s exports of machinery and electronic products reached 8.97 trillion yuan, a 3.6% increase, accounting for 58% of total exports. Automobile exports reached 442.7 billion yuan, a 104.4% increase.
Looking ahead, my country’s foreign trade exports still face challenges. Zhou Mao believes the main challenges are slowing global demand, operating costs and financing pressures faced by some foreign trade enterprises, the impact of sharp fluctuations in the global foreign exchange market on orders, and intense global market competition. “Among these, the biggest challenge stems from slowing global demand. As of now, the manufacturing PMI indices of major global economies are still contracting, my country’s August PMI new export orders index also contracted, and the export performance of neighboring economies such as South Korea and Vietnam is also poor. Furthermore, the rising risk of recession in Germany and the Eurozone reflects a weakening global demand outlook.” Regarding imports, Zhou Mao stated that the import growth rate is expected to gradually improve, mainly due to the gradual recovery of the domestic economy, restored consumer confidence, the gradual release of the comprehensive effects of macroeconomic policies, and the expected stabilization of the real estate market, which will drive a rebound in import demand. A research report by Orient Gold City International Credit Rating Co., Ltd. predicts that future policies and measures to stabilize the scale and optimize the structure of foreign trade will be further strengthened. These include phased tax and fee reductions for foreign trade enterprises, encouraging innovation in new foreign trade formats such as cross-border e-commerce and overseas warehouses through inclusive regulation, fully tapping the potential of foreign trade infrastructure such as the China-Europe Railway Express, accelerating the negotiation process of bilateral and multilateral trade agreements, and creating a more favorable institutional environment for foreign trade exports. It is worth noting that in the first half of the year, many local governments organized foreign trade enterprises to “go global” and “invite overseas customers in,” significantly increasing efforts to expand into overseas markets. Coupled with the support of various policies to stabilize foreign trade, the rapid recovery of exports by domestic private enterprises, the strong growth momentum of new foreign trade businesses such as cross-border e-commerce, and the robust growth of the “new three pillars” of foreign trade—new energy vehicles, lithium batteries, and solar cells—all of these factors help alleviate the drag on my country’s exports caused by insufficient overseas orders.
